Dementia is a complex terminal disease that involves cognitive and functional declines and behavioral symptoms. Currently over five million Americans suffer from dementia. As the population ages over the next 25 years the number of individuals with dementia will increase to 13 million placing unprecedented economic burden on families and society. Dementia also represents the greatest cause of disease burden. The annual economic burden of the disease is between $41,000 - $56,000 per person, or $215 billion nationwide. Planning for the growth in number of dementia cases will require better economic projections and effective policy. Previous studies of the economic burden of dementia were based only on cognitive impairment and were not able to evaluate the economic impact of treatments that address behavioral symptoms. Including functional dependence and behavioral symptoms helps to capture the full scope of disease severity. This study overcomes these limitations by using microsimulation methods to inform decision makers as to how direct costs (i.e., Medicare, Medicaid, and out-of-pocket spending), and indirect costs (i.e., informal caregiving costs) are accumulated over the course of the disease, how costs differ by race, and how cognition, function, and behavior impact costs. I will use the Aging Demographics and Memory Study, which links to Medicare data, to estimate costs attributable to cognition, function, and behavior. Data from the National Alzheimer's Coordinating Center will be used to estimate disease trajectories. The specific aims are to: 1) evaluate the independent contributions of cognitive, and functional declines, and behavioral symptoms of individuals with dementia to the direct and indirect costs of dementia. 2) To evaluate how costs accumulate over the course of an individual's dementia and project cost on a population level over 25 years overall and by race (African Americans and whites) using a microsimulation approach. Longitudinal trajectories of cognition, function, and behavior, and cost estimates derived from Aim 1 will be incorporated as inputs into the model. United States Census and prevalence data from the Aging Demographics and Memory Study will be used to extrapolate results on a population level. 3) Evaluate the potential cost savings to Medicare, Medicaid, and individuals (African Americans and whites), from implementing non-pharmacologic interventions that address behavioral symptoms using a microsimulation model. This study addresses the goals of the Agency for Healthcare Research and Quality (AHRQ), focuses on key priority populations (the elderly and African Americans) of AHRQ, and fits within the value-portfolio of AHRQ by improving value and efficacy of dementia care. This study is also responsive to the National Plan to Address Alzheimer's Disease by accurately accounting for dementia-related costs. The results will help to guide Medicare/Medicaid projections of future expenditures, help families understand out-of-pocket expenditures for dementia care, and inform policy makers of savings from non-pharmacological interventions.